QQ3 2025 highlights and comparisons:
- Revenue: $129.4 million; YoY decline -14.45%; QoQ decline -11.11% (per reported metrics). Net revenue progression reflects client budget constraints and slower project ramp-ups.
- Gross Profit: $45.374 million; gross margin 35.05% (down ~1.9 percentage points YoY; prior-year margin ~37%). The margin drag is consistent with holiday timing and on-demand mix, partially offset by higher bill rates in consulting.
- Operating Income: -$49.725 million; operating margin -38.42% (GAAP). The period includes a $42.0 million non-cash impairment which weighs heavily on operating performance; excluding impairment, operating profitability would be meaningfully higher.
- EBITDA: -$5.206 million; EBITDA margin -4.0% (reported). An adjustment for the $42 million impairment would materially improve EBITDA, suggesting a normalized EBITDA in the mid-to-high teens or higher depending on the treatment of non-cash items (improvement vs. prior year despite revenue decline).
- Net Income: -$44.052 million; net margin -34.03%. The impairment and lower top-line contribute to negative earnings, offset by strong cash position and ongoing cost controls.
- Diluted EPS: -$1.34; weighted average shares outstanding ~32.94 million.
- Cash Flow: Net cash provided by operating activities $0.659 million; free cash flow $0.238 million. Cash at end of period $72.495 million; no outstanding debt (net cash position of approximately -$45.94 million when considering debt). The company continues to generate cash from operations despite weaker net income, aided by working capital management and non-cash charges.
- SG&A: Run-rate SG&A $43.7 million (Q3) vs. $45.2 million prior year; down ~8% since Q1, reflecting headcount optimization, real estate reductions, and discretionary spend discipline.
- Balance Sheet: Total assets $375.6 million; total liabilities $97.8 million; total stockholders’ equity $277.8 million. Goodwill and intangibles total roughly $118.4 million. The balance sheet remains pristine with ample liquidity to fund strategic initiatives and buybacks.
- Guidance: Q4 revenue guidance of $132–$137 million; gross margin 36–37%; SG&A $45–$47 million (14-week quarter); non-run rate/non-cash expenses $2–$3 million. The company notes ongoing US policy uncertainty and expects continued longer sales cycles and decision delays; Europe/APAC and outsourced services are expected to remain stable.
- Key operational trends: Consulting bill rate up 13% YoY (and 4% sequential), enterprise bill rate up to $124 from $119, and a higher mix of larger engagements (>$1M and >$5M), supported by the Reference Point integration and cloud initiatives.